Business Publications

Document Type

Article

Publication Date

4-2021

Volume

67

Issue

1

Journal

Journal of Corporate Finance

URL with Digital Object Identifier

https://doi.org/10.1016/j.jcorpfin.2020.101803

Abstract

Analyst talent, rather than the number of analysts following a firm, matters most to investors. We find: 1) Analysts with greater “natural” forecasting talent—controlling for experience, brokerage affiliation, and task complexity—contribute relatively more firm-specific rather than industry or market information; 2) Earnings forecasts by low-talent analysts may lead to substantial mispricing; 3) When earnings surprises are large, post-earnings-announcement drift is more prominent among firms covered by low-talent analysts; 4) Firms with low-talent analysts have significantly more insider trading prior to positive earnings news; and 5) Investing following insider trading is more profitable in stocks followed by low-talent analysts.

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Citation of this paper:

Dang, C., Foerster, S., Li, Z.F., Tang, Z. 2020. Analyst Talent, Information, and Investment Strategies. Journal of Corporate Finance forthcoming

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